All right, Sharon, this is a key for anybody who is being taxed as an S-corporation, whether you're a PLLC or LLC being taxed as an S-corp or you're a straight S-corp. You know, one of the requirements for that is to run a payroll. And if you're a 1099 with an S-corporation, we want to make sure, one, that you're doing everything properly, and two, that you're actually getting paid, right? We want to make sure you're getting paid. That helps out, right? So today, we're just going to talk about the steps and things to think about in setting up payroll, because it is a little abstract for people, because if you've been a nurse for a while and you've had payroll run from your employer, now you are the employer and there's some guidelines and things that you need to adhere to. So the first thing you do is if you don't already have one, you have to obtain an EIN number, an employer identification number. It basically identifies your business and that it is a tax entity itself. You know, a lot of times, if you're just straight Schedule C, you just run it under your Social Security number. But if you're an S-corp, you want to make sure that you've got an EIN number for that company so that you've got a number that kind of corresponds with everything that goes on with that company. And they're going to be looking for that. So that's the first thing you've got to do if you don't already have it. A lot of people already have it. It's not hard to get an EIN, Sharon. You just go to the IRS's website, fill out the information that spits it out for you. I will tell you, don't make the mistake that I made the first time I went and did it, thinking they were going to mail me something in the mail. And, you know, it went to the next screen. It said, oh, you can print this out if you want to keep it for your record. I didn't print it out, thinking they would mail it. Well, they never mailed it, or at least I never got it. And I didn't have the EIN number. I'd written it down and then gone to something else. And you talk about a pain trying to get the EIN number from the IRS. Make sure you print it out. Copy it. Save it in a great place. Secure. You want to make sure you've got that EIN number. You need the EIN number paperwork for your, if you open a bank account. So you're going to need that anyway, so. All right. So that's number one. Number two, choosing a payroll system. You know, most CRNAs are not going to run payroll themselves. Now, some CPA firms will run a payroll for you and do it the old fashioned way. But for the majority of CRNAs, you need to have a payroll system that will process your payroll. You can use software for that. You know, QuickBooks. There's a lot of different ones out there. Gusto, a lot of different payroll systems. And they actually will keep you on track with what you need to be doing as well. You know, some people use what's called a PEO. Have you ever heard of that, Sharon? No, I have not. It's a professional employer organization. And what PEOs allow you to do is they allow you to bundle with a bunch of different business owners. And typically you get a discount on things by doing that. Sometimes you can get your health insurance through this PEO. A lot of times, depending upon the state, if you're just a business of one, they won't allow you to get your health insurance through it. Some states, I think they will now. And some associations will. You know, some of these PEOs get into associations and they run your payroll. They'll do your HR functions, making sure that you got everything done right from the HR side, especially if you have other employees, run all your benefits through their PEO. And you get kind of a break on everything because it's done at scale. So, you know, some some people run them through the PEOs and they benefit from that. And some people don't benefit from the PEO, just to be honest. So so choosing a payroll system, that's kind of the second key. Third thing is setting up your payroll account. The big one is you want to create payroll accounts for your federal and state withholdings. This is where you're creating one under the federal side. You're creating one under the state side. These will be used to deposit and report income taxes withheld from your employee paycheck. So you have to go second step. It's not just, oh, I'm just going to set up and it's going to be paid under my EIN. No, you have to actually set up an account at the state and federal level if you have state taxes in your state. And another part of that, I'm going to digress for just a second, is making sure that you're getting all the numbers you need from that state, because there is going to be a different number. And depending upon which state you're in, there can be local taxes as well. And you've got to get that. So, again, this is a very complicated area. You want to make sure that that's what I say for what the payroll companies charge. Typically, if you're not if you're not working with someone who's doing this for you, you don't want to take this task on of trying to run the payroll yourself. So fourth thing is determine a reasonable salary. Sharon, you know, we've talked about this a lot. What is reasonable? What's reasonable for Sharon Pierce? What's reasonable for Sharon Pierce might not be reasonable for someone else, right? It's very subjective, but it's crucial that your salary is in line with what the standards are in your industry, with being a CRNA. And I've told this story probably a thousand of times, you know, about the CRNA working in California, who his CPA told him, you know, $50,000 was a reasonable salary. And I said, well, great. I said, are there any more positions out there? And he said, yes. You know, I think there's, you know, I know of three or four. I said, well, that's great. I said, well, I know a lot of CRNAs. So why don't me and you go into business together? We'll go in, we'll get these contracts, you know, we'll collect. I think it was like his total that year was almost $500,000. I said, well, you know, we'll collect that $500,000. We'll pay these CRNAs $50,000 a year. We'll pocket the other four, $450,000 on every one of them. We'll make a killing. He goes, well, I mean, who's going to come here, move to California and work for $50,000 a year? No CRNA is going to do that. I said, bingo. I said, IRS, you know, sometimes they're not the smartest, but they're not dumb either. So making sure that you've got a reasonable salary is the key. And then the remaining income can be distributed as dividends, as we've talked about on several other modules in here before. But that's the key is the reasonable salary. And another part of that reasonable salary is what can you live with? You know, we always ask for people what their budget is every month because you don't want to be taking dividends out every single month on the 15th. I've got to have 10,000 more dollars or 5,000 or whatever. You know, dividends are not meant to be regular forms of income, but salary is regular forms of income. So making sure you understand what it takes for your household every single month. And that's that nasty B word, Sharon. You know what I'm talking about? Budget. Budget. You've got it. I've trained you. You know, the budget thing, everybody's got to have a budget, especially if you're 1099. We've got to know that. So. Establish your payroll schedule. Again, that can be weekly, it can be bi-weekly, it can be monthly. But set up a consistent payroll schedule. You know, I've seen CRNAs that, you know, I didn't take one last month. I'll take it this month, you know, or I want a couple of months without it, I have enough money and then I'll take another payroll. Consistency is the key. When are you going to be issuing paychecks? When are those tax deposits going to go in and so forth? Again, a way that that payroll company is earning their money and for no more money than that is, let them handle that. Put it on autopilot and keep going. Withholding taxes. That's another thing that happens is it's just like working in W-2 position. You know, your payroll company is going to withhold your federal tax, the Social Security tax, Medicare tax, state income taxes and so forth. All those automatically come out of your check. Your 401k contribution as the employee can come out of your check. And then you get your net check. And that's why I said earlier that B word comes in. If that net check is lower than what it takes for you to live, we got a problem, right, Cheryl? Yes, we do. So again, all this goes back to planning, making sure you understand what it takes to run your household, establishing that salary, making sure it's reasonable. A lot of moving parts, but it can be it can be pretty simplistic if you'll just follow the guidelines. Payroll taxes. This is a big one. You want to make sure these payroll taxes are withheld and that they are not late. This is a big flag. You know, they look at payroll taxes in very high regard. They want those payroll taxes. Make sure they're getting paid. Make sure they're getting paid on time. You do not want this to be late. OK? That's another portion. Like I said, your payroll company should be doing that for you. Filing the tax returns have to be done. You know, there's a 941 that's filed on a quarterly basis, and it just lays out how much money came in that quarter and much money went out, how much was paid in taxes. The 940 is also an annual return. Both of those need to be filed. There can be additional forms depending upon where you're at for Social Security and Medicare and so forth. State payroll tax reform. Share what I tell you. This is not something that most people need to mess in. It is not something most people need to mess in. Making sure that this is taken care of from a payroll provider is the optimum here.

S-corporations

payroll setup

EIN number

withholding taxes

payroll companies